Law firm to pay $1 million to settle conspiracy claim

Law firm Band Weintraub PL will pay nearly $1 million to settle claims that it was "front and center" in a conspiracy to hide money from the receiver in the Arthur Nadel Ponzi scheme.

Receiver Burton Wiand threatened to sue Band Weintraub, contending that the firm for several years attempted to conceal assets for Donald Rowe, an investment newsletter publisher who has been ordered to pay $4 million to the Nadel receivership.

Rowe was a client of prominent Sarasota attorney David S. Band, who left Band Weintraub earlier this year -- not long after a judge ordered Rowe to pay -- and formed a practice with attorney Chad Gates.

Band on Wednesday denied the firm hid funds for Rowe, saying it handled a trust account and paid bills for Rowe and his wife when they were seriously ill.

"Total BS," Band said of the allegations. "Nobody stole anything. All we did was pay their bills for them. We didn't do anything else."

Band, a well-known real estate mogul and philanthropist, said the case was settled at the insistence of Band Weintraub's insurance company.

But in court documents, Wiand insisted that Band Weintraub played a "primary role" in Rowe's efforts to evade paying the receivership.

When Rowe settled a lawsuit in February with the Nadel receiver, his attorney at the time said Rowe did not have the money to pay the $4 million judgment.

Wiand's investigation, however, found that Rowe had over several years moved more than $2.5 million to Band Weintraub, which then transferred it back to Rowe while acting as his "de facto personal financial institution," according to court documents.

"Front and center in this conspiracy has been the law firm of Band Weintraub, which has strategically funneled money through its trust account as though it was (Rowe's) personal account in a clear effort to evade the receiver's collection efforts," Michael Lamont, an attorney for Wiand, stated in court documents.

The receivership is collecting money for the 350 investors who were bilked out of $162 million in the hedge-fund Ponzi scheme Nadel operated in downtown Sarasota.

Current Band Weintraub attorneys not involved

U.S District Judge Richard Lazzara approved the settlement Tuesday under which Band Weintraub will pay $943,527 within 20 days.

The money will come from its professional liability insurance coverage.

The law firm "does not admit any liability," according to the settlement.

In a statement, Band Weintraub principal Gregory S. Band, David's son, said the matter has been "resolved."

"It involved the recovery of funds that had been transferred to Band Weintraub by a client of an attorney who is no longer with the firm," he said. "None of the six attorneys currently at Band Weintraub were involved in any way with this matter."

He said his firm, whose other named partner is real estate lawyer Anne Weintraub, was dismissed from the ongoing Rowe litigation in September after reaching the agreement to settle.

Wiand contends Rowe transferred funds in and out of Band Weintraub after he sued Rowe in early 2010, and even after a federal judge approved the $4 million judgment in February.

Wiand has said Rowe played a pivotal role in the Ponzi scam by touting Nadel's funds and soliciting investors.

Rowe pocketed $2.7 million in fees and also collected $4 million in false profits from the hedge funds.

David Band split with Band Weintraub shortly after Judge Lazzara approved the judgment against Rowe. State records show that Band Gates PL was formed on Feb. 21, about two weeks later.

David Band said his departure from Band Weintraub had "absolutely nothing" to do with the Rowe matter.

The Bands were together for about four years, forming their firm in 2009, about two months after a dispute over malpractice insurance led to the elder Band's exit from Abel Band, a firm he built into one of Southwest Florida's legal powerhouses during 40 years there.

Abel Band's insurer refused to cover Band's real estate investment activities, and the attorney refused to sign indemnifications that would have protected his then-partners.

Nadel victims pleased more money has been recovered

Sarasota attorney Morgan Bentley, who represents 36 investors in the Nadel scheme, said his clients were happy that more money had been found.

"They only wish these funds had been disclosed and disgorged earlier, especially since the issues with Nadel and Don Rowe have been so well publicized," Bentley said.

"Obviously, the allegations made by the receiver regarding a conspiracy by Don Rowe and a law firm to avoid the judgments are quite serious, and I would hope they are not true. Nevertheless, we are confident the appropriate process will be followed in that regard going forward," he said.

Nadel's victims have recovered about 40 percent of their losses so far.

Wiand claimed that Rowe, his wife, Joyce, and other family members used entities they controlled to evade giving money owed to the receivership. They did so, he alleged, by moving funds in and out of the trust account at Band Weintraub.

One transfer of $457,339 by the Rowes' Carnegie Marketing Associates occurred on March 23, about six weeks after Judge Lazzara approved the judgment against the newsletter publisher.

While the Band Weintraub settlement ends his scrutiny of the firm, Wiand said he expects to recover additional funds from Rowe.

"We do believe there will be more," he said. "We will continue to aggressively pursue that."

EARLIER: Law firm Band Weintraub P.L. will shell out nearly $1 million to the receiver in the Arthur Nadel Ponzi scheme to settle allegations it helped a former client evade required payments.

Receiver Burton Wiand threatened to sue Band Weintraub, claiming the firm engaged in a “conspiracy” to conceal money it accepted from Donald Rowe, an investment newsletter publisher who was ordered in February to pay $4 million to the Nadel receivership by a federal judge.

Rowe was a client of prominent Sarasota attorney David S. Band, who this spring left Band Weintraub and formed a new practice with attorney Chad Gates.

The Rowe funds were transferred to Band Weintraub after the receivership filed a lawsuit against Rowe. Wiand contends Rowe played an instrumental role in the $168 million hedge fund scam by touting Nadel's funds and soliciting investors. Rowe pocketed $2.7 million in fees and also collected $4 million in false profits from the hedge funds.

U.S District Judge Richard Lazzara approved a settlement Tuesday, under which Band Weintraub will pay $943,527 within 20 days.

The law firm “does not admit any liability,” according to the settlement.

Check back at HeraldTribune.com for more on this developing story.

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